In terms of cryptocurrency, Bitcoin on Monday hit a fresh two-year low of $15,479
The dollar fell on Tuesday after rising the day before as investors flocked to safe-haven assets because of concerns over COVID flare-ups in China, while bitcoin was under pressure due to worry about further contagion from the failure of cryptocurrency exchange FTX.
The dollar was at 141.86 yen, down 0.6% after a 1.2% gain, and the euro was up 0.3% at $1.0265 after losing 0.8% on Monday. Sterling increased 0.46% to $1.187, partially reversing its 0.6% decline. On Monday, flows to the dollar coincided with Beijing’s warning that the COVID-19 pandemic was losing its toughest test yet, with a spike in COVID cases prompting further restriction measures. For the first time since May, the virus also claimed lives in the nation’s capital.
Tuesday saw tighter restrictions in Beijing and other places, but currency traders appeared to believe that the movements from the previous day were adequate. The dollar lost some impetus on Tuesday, according to Lee Hardman, a senior currency analyst at MUFG, who cited more circumspect words from U.S. Federal Reserve officials as a contributing cause.
As of next month, the central bank can switch to smaller rate increases, according to Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly, who both stated that the impact of rate increases in the real world is probably greater than what the short-term rate target implies. The current account deficit for the eurozone decreased in September, according to figures released by the European Central Bank on Tuesday in Europe.
Dominic Bunning, head of European FX research at HSBC, said: “While we flagged the big deterioration of the current account as something that was creating a challenge for the euro earlier this year, we may already be seeing signs that the worst is now over.” However, he advised against reading too much into one data point.
The antipodean currencies, which are frequently viewed as liquid proxies for the Chinese yuan, were particularly hard hit by the recent bout of risk aversion relating to China, with the Australian dollar falling about 1% on Monday. On Tuesday, it recovered some of its losses, increasing 0.5% to $0.6639. However, the trend continued outside of China, with the dollar losing ground versus the Swiss franc by 0.43% to 0.9552, erasing a similar gain the day before.
In terms of cryptocurrencies, bitcoin dropped to a fresh two-year low of $15,479 on Monday, becoming yet another casualty of the rush to the dollar on that day as well as concerns over the stability of cryptocurrency broker Genesis. Although Bloomberg News reported, citing sources, that Genesis was having trouble finding new money for its lending section and warned investors it could need to file for bankruptcy if it does not, Genesis indicated on Monday that it has no immediate intentions to do so.
Last week, the lending unit stopped accepting redemptions due to the failure of FTX, which declared bankruptcy on November 11.
